Recently, we saw lots of articles regarding investing in Gold as an asset or as a commodity. And as normally I wanted to be in that hype, go with that trend, gold investor, the FOMO (Fear Of Missing Out).
When I did some financial education training I’ve understood that GOLD, as a commodity, is one of the safest ways to keep your net value during a crisis (strong economical crisis), so I think that the recent valuation of gold is associated with the current pandemic.
But is it justified? What I am asking is, if we are having an increase in the price, that means that we have investors buying lots and lots of gold. But is the reason for buying gold justified? Or is creating another bubble because of fear? I am not a financial analyst so my judgment can’t be taken for granted.
Following the thread of toughts here is a list of reasons for the increase of the price (my reasons):
- Financial analysts say that the current economic crisis (or the coming crisis) will be worse than the one from the Great Depression, and so many other speculations. But we can’t be sure, can we? History is in the past, only after the moment in time has passed, so we will know for sure in 1-2-3 years after everything goes back to normal (or what definition of normal will have then). Then we will be able to compare this crisis with others from the past. But if they are right, then buying gold can be justified. But we can also buy from fear of something worse? Better safe than sorry in this case.
- Another spike in the price is because of how many gold derivates you have now, except the physical assets. You have ETFs, futures and so many more ways to invest in gold. So it’s easier to have access to a gold product
- The third reason I can think about is that now we have the internet, we have a faster way to access information, to act on it. Anyone can do it as it-s easier. I mean now you can buy gold with 1 dollar (and the dollar is not backed-up by the gold anymore). So an increase of investors can mean an increase in the gold that is bought (like how it was in 2017 with Bitcoin – the digital gold).
But, of course, you can’t start investing without doing your research. After reading multiple articles and blog posts I felt that the nicest article I read is from the blog: Financial-Expert.co.uk and the article is How to Invest in Gold using 7 Methods. I’ve been reading articles on this blog for some time but didn’t think I’ll be stumbling on this one by coincidence.
Now considering the mentioned article, I will not describe how to invest in gold, there is a lot of information out there. Instead I will think of why to invest from my point of view, taking into account that the first part of this article was more orientend in a negative way.
Some reason for investing in gold that I can find suitable is that the gold value is increasing in price (maybe because is lesser and lesser available). In the last 100 years, it had a 5770% increase in price. I am sure there are other products with better results, like investing in S&P500, but buying gold can be attractive taking into consideration this return.
And who doesn’t have old jewelry, broken or family heirloom in good condition, or even newly bought. So you are already investing! Just don’t start selling it, yet!
So I think that investing in gold, during a crisis, can be a good thing, but only for protecting your net value. Otherwise gold can be good for long term investments 10+ years, but you can’t expect any passive income from it during this time.
I think I will go with the easiest way of investing in commodities, by Revolt, as I am not keen to have a big sum, just for the hype and fun, and I hope I will make better decisions in 10 years (at the next crisis, haha).
Thank you for reading this and keep investing:D!
Disclaimer: I am not a financial consultant, all the information you find here are my decisions, I taken at that moment, on my own analysis. I am open to any type of discussion about money. If you want to replicate my portfolio take into consideration that it is your money.